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Investigation of Improper Activities by a State Agency and Its Employees
A Director Committed Gross Misconduct When She Repeatedly Violated Merit-Based Employment Principles and Attempted to Retaliate Against Suspected Whistleblowers

Report Number: I2019-1

March 26, 2019
Investigative Report I2019-1

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

In addition to the financial, performance, and high risk audits that my office performs, we administer the statutory provisions of the California Whistleblower Protection Act, which states that employees should be free to report improper governmental activities without fear of retribution. My investigations division’s exclusive mission is to receive, review, and investigate allegations of state employees committing improper governmental activities within state agencies. In fiscal year 2017–18 alone, my staff substantiated or actively pursued evidence for nearly 1,500 allegations.

When an investigation substantiates improper governmental activities, my office may issue public reports summarizing our investigative work, but we do so only after carefully weighing the interests of the State and our obligation to keep confidential the identities of the whistleblowers and the employees involved. I also have authority to issue nonpublic reports to the heads of the agencies involved and, if appropriate, to the Office of the Attorney General and the appropriate legislative policy committees, when I determine that this reporting method will best correct the improper activity while protecting whistleblowers and cooperating witnesses.

In April 2015, my staff deemed credible allegations involving improper governmental activities by a department director and her daughter who worked at the same department. Because of the limited scope of these initial allegations against the department’s highest ranking officer, and as state law allows, my office formally referred the case to the department's oversight agency for it to complete further investigation by June 2015. In that written referral, we cautioned agency officials that, by law, they must keep confidential the existence and details of the complaint, and that they could not disclose any information provided by my office or obtained from reviewing or investigating the allegations.

Nevertheless, we later learned that, within just a few weeks of our issuance of that confidential referral to the oversight agency, the agency secretary directly violated the law by sharing with the director information of the impending investigation, which is evidenced by an email between the director and the agency secretary. In that email, the director defended her daughter’s presence in the department and speculated that the allegations came from within a particular ethnic group of employees. A few hours later, the director further shared with her brother, who also worked at the department, her email to the agency secretary, and the director indicated to the brother that he should delete the email after reading it.

In addition to the agency secretary's clear disregard of confidentiality requirements, the oversight agency failed to provide its final investigative report to us until a full year after the 60‑day deadline required by law. During that year, my office received additional allegations of other instances of the director's improper governmental activities. Given the increased number and scope of the whistleblower accusations and our heightened concern about confidentiality and protecting whistleblowers against retaliation, we decided that the oversight agency's response to the investigative request was insufficient to fully address the allegations. Therefore, we incorporated the agency's findings into a separate and larger investigation that my staff conducted.

In the course of our investigation, my staff searched through more than one million emails to extract relevant evidence and interviewed dozens of witnesses regarding allegations spanning seven years. An alarming 20 of the individuals we interviewed told us that they feared retaliation from the director for their involvement in our investigation. Our concern was amplified when we learned in December 2017 that, despite our warnings to the director to avoid retaliatory conduct, the director attempted to confirm the identity of the suspected whistleblower by instructing an employee to review more than two years of email messages exchanged between a suspected whistleblower and department employees.

As we were wrapping up the last details of the investigation, we provided the oversight agency with a draft copy of our investigative findings and the director retired from state employment shortly after. Determining that it served the best interests of the State, the whistleblowers, and the witnesses, we issued a nonpublic report in May 2018 to the head of the agency, the then‑Governor, key legislative leaders, and to the heads of the State Personnel Board and the California Department of Human Resources to allow these entities time to conduct their oversight responsibilities. As you will see, this investigative report details improper governmental activities spanning from 2011 through 2018 where the now‑former director influenced a significant number of improper personnel transactions to benefit her daughter and another employee. Throughout our investigation, we found that the director repeatedly violated merit‑based employment principles and engaged in nepotism, bad faith hires, improper promotions and transfers, attempted retaliation, and other misconduct that presented a risk to the State and which, in their entirety, constitute gross misconduct.

After we issued the nonpublic report in May 2018, we expected that the agency would take swift and appropriate disciplinary action against the director and associated subjects, protect those who cooperated with the investigation, and implement our recommendations to prevent future improper activities. Despite the agency providing its mandated monthly updates to us, we do not yet see evidence that the agency has acted with appropriate rigor to remediate the effects of the director’s behavior; in fact, since we informed the oversight agency of our findings, it has not fully implemented any of the recommendations we made in the report. As of March 2019 and excluding duplicative recommendations, the agency has four pending recommendations, four partially implemented recommendations, and two recommendations we deemed resolved because impacted employees resigned or retired from state service. See Appendix A for a detailed analysis of the agency’s progress in implementing our recommendations.

The agency's lack of demonstrable progress in implementing our recommendations, combined with the briefing we provided to the new administration and our determination that the threat of retaliation at the department had significantly decreased, all lead me to conclude that it is now in the best interest of the State to publicly report the findings of this investigation. Most importantly, since most of the employees involved in the investigation have since left the department, as have the director and the director's family members, many associated subjects, whistleblowers and cooperating witnesses no longer face significant threats of reprisal. Therefore, the following is the original report in its entirety, with the removal only of names that we are required to keep confidential and the addition of Appendix A, describing the agency’s response thus far to our recommendations.

Respectfully submitted,

California State Auditor

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